WASHINGTON – President Bush left Israeli officials delighted yesterday as he warmly endorsed Israel’s right to self-defense and again blasted Yasser Arafat after meeting Israeli Prime Minister Ariel Sharon at the White House.

Bush also said the time isn’t yet ripe for peace and put the onus on the Palestinians – just two days after Egyptian President Hosni Mubarak unsuccessfully pushed for a timeline toward creation of a Palestinian state.

“See, the conditions aren’t even there yet [for peace] – that’s because no one has confidence in the emerging Palestinian government,” Bush told reporters in the Oval Office. “And so, first things first, and that is: What institutions are necessary to give the Palestinian people hope and to give the Israelis confidence that the emerging government will be someone with whom they can deal?”

Despite earlier reports, officials said Bush and Sharon did not discuss a peace settlement that would return Israel to its 1967 borders.

“Israel has already clarified that she cannot go back to the ’67 borders,” Sharon said after the meeting.

U.S. officials said there was no discussion of a timeline toward a Palestinian state or the need for one during the hour-long Bush-Sharon meeting and a lunch featuring gazpacho, smoked chicken, red snapper and mango sorbet.

Sources said the controversy over Jewish settlements – in which Sharon and the U.S. differ – was not raised.

And PLO Chairman Arafat was “barely” mentioned, said a top Israeli official traveling with Sharon’s entourage.

But sources said Bush and Sharon discussed what would happen in the Mideast once Arafat is no longer leader of the Palestinians.

The top Israeli official said Sharon was pleased with the outcome of his sixth summit meeting with Bush.

“I think we got what we wanted on this trip,” the official said.

The Israelis were clearly happy when Bush said of Arafat, “I am disappointed that he has not led in such a way that the Palestinian people have hope and confidence.”

Asked if Israel’s latest siege of Arafat’s headquarters hurt the peace process, Bush replied: “Israel has a right to defend herself.”

Sources said Sharon also told Bush that he is concerned about Syrian and Iranian support for Hezbollah guerrillas in Lebanon who have obtained a large missile arsenal in the last two years.